Japanese equipment manufacturer Kubota grew its finance receivables by roughly 4.6% in the first quarter, but is bracing for a slowdown in the agricultural market.
Kubota makes a equipment for a variety of industries, but much of its business focuses on construction and agricultural, particularly combines, implements and tractors. The company said today that it is expecting a decline in demand for its agricultural products in North America as the sector copes with waning crop prices.
“The residential market of tractors has been slightly weaker than assumption due to continuous stagnation in business sentiment,” Kubota’s earnings release noted. The “agricultural market has been coming to be slow more explicitly due to crop price decline.”
BY THE NUMBERS
- Kubota’s overall revenue in Q1 was 775.2 billion yen ($4.9 billion). About $3.9 billion of that came from outside of Japan.
- Current finance receivables were roughly $3.7 million, up 4.62% year over year.
- Finance income was roughly $30.1 million, up from $21.1 million in Q1 2023.
- Costs of financing rose nearly 37% to $9.7 million.
U.S. sales dip
Kubota reported a decline in sales of all its tractors in the United States. The lower-horsepower machinery — tractors running 40 horsepower and below — saw Q1 sales drop 17% YoY. Sales of tractors 40 horsepower to 120 horsepower declined 8.4% YoY in Q1, while sales of higher-performance tractors running at 120 horsepower to 160 horsepower dipped 2.6% YoY. The decline in all performance categories continues a trend of slipping sales the company has seen since Q1 2023, according to its earnings supplement.
U.S. retail sales of mini excavators also declined, down 14.2% YoY in Q1 compared with growth of 3.8% during the corresponding period last year.
Compact track loader sales in the U.S. were down 6.9% in Q1, compared with an increase of 17.4% in Q1 2023.
The skid steer market was the only segment of Kubota’s business that saw an increase in U.S. sales in the first quarter, up 3% following a 5.3% decline during the corresponding period in 2023.
Kubota noted that its construction market continues to be strong, noting in its report that increasing infrastructure development and housing construction worldwide have remained steady. Demand for construction in North America pushed the region’s overall revenue up $117.4 million in Q1.
Shares of Kubota [OTC: KUBTY] were trading at $80 as of market close today, down 0.17% from market open. Kubota has a market capitalization of $18.85 billion.
Editor’s note: All figures have been converted to U.S. Dollars.
